Amazon is planning to build its second distribution center in Romulus, partly with funds from a five million dollar state grant. The Michigan Strategic Fund board approved the grant Tuesday.
Amazon had considered other locations in the Midwest and Canada as potential development sites, according to Josh Hundt, Vice President of Business Development Projects at the Michigan Economic Development Corporation, which oversees the Strategic Fund Board. The Michigan Business Development Program is the pot of money allocated by the state legislature where the funds will come from.
“We found it important to do whatever we could to make sure that this growth, that was going to occur somewhere for Amazon, occurred here so we could have 1600 jobs for Michigan families,” Hundt said.
Hundt says Amazon has committed to hiring 1600 employees full-time, with additional seasonal and part-time workers as necessary.
The grant money will not be dispersed until Amazon fulfills its obligation to hire full-time employees. The terms of the deal outlined in a memo from the Michigan Business Development Program shows Amazon will be eligible to receive a $2.5 million payment after “the creation of 850 jobs”, with more disbursements allotted as more jobs are created.
Hundt says the grant money will recoup Amazon for the cost of widening and resurfacing roads near Romulus where the distribution center will be located.
Although state officials are “excited” by the hiring of large numbers of employees Amazon promises, a study published in 2016 by the Institute for Local Self-Reliance concluded Amazon’s net-effect on the economy equates to fewer overall jobs. Co-author of the study, Stacy Mitchell, says Amazon hurts competition by getting the consumers in the habit of shopping online instead of at brick-and-mortar retail stores. Mitchell says in 2017 purchases of Amazon goods and services equated to $1 out of every 2$ spent online.
“As Amazon has grown, it is displacing a lot of sales from brick-and-mortar retailers. Not just the chains, but also locally owned businesses,” Mitchell said. “As those retailers cut back, close and lose business, they’re actually eliminating more jobs than Amazon is creating.”
A previous $7.5 million grant was awarded to Amazon in order to build a distribution facility near Livonia. Hundt says construction for the Livonia facility is on-schedule and hiring will take place over the summer in time for the holidays. He says the Romulus facility is slated to open in 2018.
Amazon is expected to invest approximately $140 million for the construction of the Romulus facility, bringing its total investment in Michigan to $230 million, according to Hunt. Amazon has received $12.5 million in state grants.
Amazon reported $35.7 billion in sales for the first quarter of 2017.